Thematic and sectoral funds have emerged as the new bandwagons in the mutual fund investment landscape and for all the right reasons. They are great for your asset allocation objectives, easy on the pocket in terms of expenses incurred on fund management and are less overwhelming as an asset class than pure equities for novice investors or those with risk appetites on the lower sides. Two popular categories of thematic funds that are garnering the attention of retail investors recently are healthcare and consumption thematic funds.

Healthcare thematic funds could encompass stocks and funds associated with the healthcare sector – these could include pharmaceutical companies, hospital chains, health insurance companies, firms manufacturing medical equipment and the likes.

The COVID-19 pandemic has irrevocably changed our attitudes towards healthcare and in the past two years with the onslaught of the public health emergency unleashed by the virus, the healthcare sector is expected to continue to witness an ascent. Increased spending on healthcare in the post-COVID world coupled with enhanced insurance coverage and a steady demand for healthcare services that are backed by the latest developments in science will continue to accelerate the growth of the sector.

Consumption thematic funds are those that primarily invest in consumer facing companies: these funds include stocks of companies whose goods and services are directly used. The performance of these funds varies in accordance with prevailing consumer behaviour patterns in the country. Consumption funds can be spread across multiple sectors such as FMCG, auto, retail, financial services etc.

India is one of the fastest growing economies in the world that is blessed with a strong demographic dividend and an ascending middle class. This augurs well for the consumption sector and that has been the case too in recent years with consumption being one of the most diversified and preferred themes in Indian equities. The consumption sector is also expected to soar after a period of lull brought about by the pandemic and the government’s thrust on enhancing overall economic growth through domestic consumption makes it a theme to look out for.

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